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Forex Market Pushes Higher Into 2021 as PMIs Awaited

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Forex Market Pushes Higher Into 2021 as PMIs Awaited
  • FX Majors Continue Strong Trade Against USD
  • Eyes on Georgia for Additional Stimulus
  • Markets Positive Despite Slow Vaccine Rollout

The US Dollar has continued its sell-off into 2021 as those in the forex market look away from the traditional safe haven perhaps hoping that in the US and globally the page can finally be turned on COVID-19. Both the Euro and Pound have continued their strong momentum then against the Dollar in the now post-Brexit era. PMI figures from the US will also be closely watched today with finalized numbers due both there and in Europe. Meanwhile numbers on Wall Street suggest the first trading day of the New Year is set to bring more highs.

Dollar Weakness Continues Amid Optimistic Market

The US Dollar weakness that has been a feature of the last quarter of 2020 has continued into this week with the Dollar Index remaining at a multi-year low point below 90. This continues to mark a degree of optimism from those in forex trading that the market can continue to advance into this year.

Traders are slow to revert back to the safe haven USD even though coronavirus cases continue to spread quickly and there are a number of other factors that could derail the economic progress which has so far been made. On the other side this has been met by a strong and resilient Euro and Pound both. These two major currencies have emerged strongly from the shadow of a long-running Brexit deal finally completed last week at the 11th hour prior to the UK exit from the EU.

Senate Control Holds Key to Stimulus

Much of the current positive momentum and even Dollar weakness could be as a result of the increasing stimulus provided to many markets around the world. In the US this just recently included a $900 billion boost. It is widely believed though that if the momentum is to continue, more funding may be needed.

This is only likely to pass if the Democrats control the senate. Georgia is the key hotspot that will decide that outcome with two special election runoffs between candidates that are currently very close in the polls. A double Democratic win would see them take control of the Senate with freedom to pass more stimulus. Even so, this could be a double-edged sword for markets, and forex brokers expect trader tension as these results are expected.

Wall Street Gains Continue Despite Vaccine Hiccups

All the major US indices look set to open their accounts for 2021 higher still. This continues a rise that has been nothing short of meteoric from the March coronavirus lows. The Dow Jones, S&P 500, and NASDAQ are all looking to open the day around 0.5% higher.

These gains are despite the fact that the COVID-19 vaccine rollout has been slower than expected and cases continue to spread. Only around 4 million people received the vaccine so far. This is much lower than the 20 million figure that had been expected by health chiefs. Still though the market appears to see the end of the pandemic in sight.

 

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Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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